2019-05-01 Money Australia

ASK PAUL

Withaninheritanceonthe

way,Pamcanuse...

Q

I ama 32-year-oldwitha

greatjobandpotentialfor

wagegrowth.I earn$85,000

andownanapartment.I haveabout

$210,000leftonmymortgageand

about$30,000savedinanoffset

account.I transferaround$1000

everymonthintomymortgage.

I willbeinheritingaround$30,000

inthenextsixmonths.ShouldI put

themoneytowardsmymortgageor

shouldI lookatbuyinganotherprop-

erty?OrshouldI lookatinvesting

inthestockmarket?

I amcluelesswhenit comesto

sharesandsimilarinvestments,so

I wouldn’tevenknowwheretobegin.

Here,Pam,wehavetheclassicrisk-and-

returndilemma.Payingoffyourmort-

gagebyaddingtoyouroffsetaccount

is a reallysensibleandsuper-safeoption.

Gearing upandborrowingmoneytobuy

aninvestmentpropertyoffersmorerisk

butpotentiallyhigherreturns.

Thebestwaytominimiseriskin

propertyis toborrowlessandhavea

long-termtimeframe.Sowitha falling

propertymarketin mostpartsofAustral-

ia,it seemstomeyoucoulddowell

topoptheinheritanceintoyouroffset

accountandkeepaddingthe$1000a

month.Thiswillturnintoa largedeposit,

soif youwanttobuyanotherproperty

youcandosomoresafely.Youalso

mentionedyourprospectsfora higher

salary– in timethatwouldallowdebt

tobepaidoffmoreeasily.

I chuckledatyourhonestcomment

aboutshares.Doremember,though,that

youwillholdsharesin yoursuperfund.

I’dsuggestthisis a goodtimetocheck

yoursuper,makesureit is in a low-fee

fund,ensureanyinsurancein thefund

is whatyouneedandtakea lookatthe

sharesthefundownsforyou.

Q

MyhusbandandI arein

ourmid-30sandpurchased

a townhouseinoneof

Brisbane’sbaysidesuburbsin2017,

shortlyaftermovingtoQueensland.

I amincrediblyhomesicksoam

lookingtomovebacktoNSW

(Wollongong)tobeclosertofamily

laterthisyear.Whatshouldwedo

withthetownhouse?Wehavebeen

payingoffextraamountsevery

fortnightbutstillhave$362,000

leftontheloanandthepropertyis

probablyworthabout$420,000.

Wehaveabout$30,000insavings.

Ourgrossannualincomeasa

coupleisabout$120,000.

Wouldit bewisetorentoutthe

townhousetobuildupmoreequity,

andrentinWollongonguntilwecan

buildupanotherdeposit,etc;orbite

thebulletandsellthetownhouse

HomesickKrystlefacesa toughdilemmabut...

$30k to

kickstart

deposit

Happiness should come first

A

beforerelocatingandtrytobuyin

theWollongongmarket?

Thisis alwaysa bitofa dilemma,Krystle,

butonethingis forsure:yourlifeand

happinesscomefirstandmoneysecond.

So you have sorted the key issue and are

heading home where you want to be.

Holding or selling the townhouse is

a mix of emotion and facts. For me, the

overriding thing is the prospect of rent

and capital growth on it. The rent will be

easy – any agent can tell you that. Then

the capital growth will depend on the

area, its desirability, plus the character-

istics of your place. In the perfect world

you would weigh up these factors, then

do a comparison with Wollongong and

buy where the returns look to be higher.

I don’t know a lot about Brisbane’s

bayside suburbs, so I’ll have to leave

that to you. But a distant rental prop-

erty is not ideal. Equally, I do know that

Wollongong is growing rapidly. So as it

sounds to me as if you will be back there

permanently, unless you feel the town-

house is really well located, I know what

I’d do. Sell and buy where I will be living.

Q

&

A